China’s One Belt, One Road strategy threat to Canadian trade

By on February 14, 2017Comments Off on China’s One Belt, One Road strategy threat to Canadian trade

China likely to focus more on Asia and the Indian Ocean basin for its commodity needs and less on North America

PORTLAND, Ore. Feb. 14, 2017 /Troy Media/ – Geography has always mattered. Technology can shape how nations interact economically and politically. Railroads can traverse vast deserts and mountains, ships can cross great oceans. Planes can do both. But geographic reality remains the same: mountains are still tall, oceans still broad.

In January, a train loaded with containers pulled into London. The train originated in Yiwu in the eastern Chinese province of Zhejiang. Loaded with textiles and various consumer goods, it had travelled 11,600 km in 18 days – half the time it takes by sea via the Suez Canal.

The train was operated by Inter-Rail Group, a Switzerland-based, multinational transport operator, on behalf of China Railway. Along the way, various railroad companies handled the shipment. The containers had to be unloaded and reloaded various times due to the incompatibility of the railroad gauges along the route.

The shipment, the first to reach London, was the latest example of Beijing’s One Belt, One Road initiative to develop multiple transport corridors from China’s coastal cities to western Europe. Trains have been dispatched to Hamburg, Madrid, Kabul and Riga. Trains have also travelled from Hamburg to the Chinese province of Hefei. It’s dubbed a 21st century Silk Road, in reference to the trade routes that connected east Asia with the Middle East and Black Sea during antiquity and the Middle Ages. In 2016, around 40,000 containers were shipped by rail from China to Europe. The number is expected to increase to 100,000 by 2020. By comparison, in 2014, China shipped 5.75 million containers to Europe by sea.

The One Belt, One Road initiative is a trade, investment and policy framework proposed by Chinese President Xi Jinping in September 2013. It’s designed to create efficient transportation channels between China’s coastal cities and the rest of Eurasia. There are two components: A broad, land-based transportation infrastructure of pipelines, roads and high-speed rail links across Asia to connect the Pacific coast with Europe’s extensive transportation infrastructure, dubbed the Silk Road Economic Belt; and the equally extensive ocean-going Maritime Silk Road, anchored by extensive new port development and expansion throughout the Indian Ocean.

The Silk Road Economic Belt would consist of three prongs: A northern belt through Central Asia, Russia to Europe. The central belt across Central and west Asia to the Persian Gulf and the Mediterranean. The southern belt through southeast and south Asia to the Indian Ocean.

The region covered by the two initiatives ranges from east Africa to central, south and east Asia, and encompasses the northern Indian Ocean basin. Around 60 countries would be involved in the One Belt, One Road program. Beijing has estimated that the initiative would require $4 trillion to $8 trillion of investment to bring to fruition (all figures in U.S. dollars).

In the Indian Ocean and south Asia, Chinese investment is financing the development of high-speed rail links from China’s costal cities through Myanmar to the Indian Ocean. Beijing is also heavily involved in the development or expansion of port facilities throughout the region. In Sri Lanka for example, China has supplied more than $5 billion in development aid and loans, and has pledged another $10 billion in investment over the next three years. China Merchants Port Holdings has acquired an 80 per cent interest in Sri Lanka’s port of Hambantota and leased for 99 years an additional 15,000 acres surrounding the port. China has also invested $1.4 billion in developing infrastructure in the port in Colombo, Sri Lanka’s capital city.

Additional Chinese investment includes $45 billion in various Pakistan projects, the lion’s share devoted to a new Indian Ocean port at Gwadar. China has also leased a small island in the Maldives for 50 years for $4 million. More importantly, Beijing is building its first overseas base in Djibouti, in east Africa, at the junction of the Red Sea, the Arabian Sea and the Indian Ocean.

The initiative would integrate the Eurasian and Indian Ocean region into a cohesive economic zone by combining extensive transportation infrastructure, resource development, and cultural and political exchanges with expanded trade. Many of the countries in central and southeast Asia are already investors in the Chinese-organized Asian Infrastructure Investment Bank.

The success of the initiative would have far-ranging implications for the geopolitics of Eurasia and the Indian Ocean, and represent a significant shift in the economic balance of power in the world. It would bring immediate consequences to the political balance and eventually to the military balance.

China’s economic and diplomatic initiative is grounded in its need to ensure its access to vital raw materials, and access to foreign markets for its manufacturing output. The Silk Road Economic Belt and the Maritime Silk Road are parallel, redundant strategies to ensure success.

The economic success of One Belt, One Road presupposes a degree of influence in Central Asia that China has not had since the heyday of the Mongol Empire. It’s a strategy that’s incompatible with Russian interests and would pose, in time, a strategic threat to the U.S., and its Canadian and European allies. For Canada, it would mean China would focus on Asia and the Indian Ocean basin for its commodity needs and less on North America.

It also underscores that, despite technological revolutions and a complete reshuffling of the world’s major economic actors, geography still matters.

The views, opinions and positions expressed by all Troy Media columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of Troy Media.

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